Business | Markets

Asian stocks fall on economy concern

Asian stock decline continues as surging credit costs threaten to tip economies into recession.

  • Bloomberg
  • Published: 09:18 October 7, 2008
  • Gulf News

  • The drop in Asiasn stocks extended a rout that wiped more than $2 trillion from global markets.
  • Image Credit: Gulf News Archive

Dubai: Asian stocks slumped on Tuesday, extending a global rout, as surging credit costs and slowing demand for the region's exports threatened to tip economies into recession.

Japan's Nikkei 225 Stock Average lost 1.9 per cent to 10,275.83, having earlier dipped below 10,000 for the first time since December 2003.

"I'm shocked by the speed at which the global economy has deteriorated," said Roger Groebli of LGT Capital Management. "The last bullet that central banks have is to lower interest rates. If that does not work, I really don't know what will happen."

The MSCI Asia Pacific Index fell 1.1 per cent to 99.29 in Tokyo, with industrial shares and companies dependent on consumer spending contributing the most to the decline.

The drop extended a rout that wiped more than $2 trillion from global markets, sending the Dow Jones Industrial Average to its first close below 10,000 since 2004.

Most stock markets in the region fell. Hong Kong is closed for a holiday. In Thailand, the SET Index sank 2.2 per cent after police fired tear gas to disperse protesters.

Japan and Australia's central banks pumped more than $11 billion into the financial system to ease record-high money- market rates.

"Investors couldn't imagine the global economy would fall apart as it has," said Nobuyuki Kashihara, who helps oversee $26 billion at Mizuho Asset Management Co. in Tokyo. "The feedback effect between the financial world and real economy is pushing us into uncharted waters."

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